MEMO FROM MOSCOW
Russia / Ukraine Steel News
CIS Region Steel Industry Review, September 2008
2007 was a successful year for the whole CIS steel sector. CIS countries produced about 124 mt of rolled steel products, thus reaching former USSR production levels not seen since the end of the 1980s.
In terms of crude steel output, Russia in 2007 with production of about 75 mt was the fourth largest producer in the world. The eight largest iron and steel works listed below produced almost 90% of the country's crude steel output (Exhibit 1).
| Millions tonnes | Crude Steel | % Share | Rolled Steel | % Share | Profit, Rbl m | % Share |
| MMK, Magnitogorsk | 13.264 | 18% | 12.290 | 21% | 68,326 | 24% |
| Severstal, Cherepovets | 11.867 | 16% | 10.702 | 18% | 57,170 | 20% |
| NLMK, Lipetsk | 9.056 | 13% | 8.387 | 14% | 53,236 | 19% |
| Zapsib, Novokuznetsk | 6.535 | 9% | 5.088 | 9% | 23,866 | 8% |
| NTMK, Nizhny Tagil | 5.844 | 8% | 5.186 | 9% | 30,088 | 11% |
| Mechel, Chelyabinsk | 5.011 | 7% | 3.514 | 6% | 7,096 | 2% |
| Urals Steel, Orsk | 3.661 | 5% | 2.830 | 5% | 8,105 | 3% |
| OEMK, Stary Oskol | 2.890 | 4% | 2.563 | 4% | 9,301 | 3% |
| Russia total | 75.395 | 100% | 59.635 | 100% | 284,813 | 100% |
Russian output of finished rolled steel products in 2007 reached 59.6 mt (+2.4% against 2006), within which long products accounted for 33.6 mt and flat products amounted to 25.5 mt.
Russia is the largest steel exporting country, and in 2007 exported about 27 mt (45% of total production) of steel products. Imports were 6 mt only.
Russian steel consumption in 2007 came to 38.6 mt of finished products (+17% on 2006). The growth of domestic consumption was mainly determined by increased demand for steel in the fuel and energy sector, the machine-building sector for oil-extraction and oil-refining, and the automotive industry. According to a recent Ministry of Economy and Industry forecast, Russian steel consumption in the year 2010 will reach about 51 mt (+32% compared to the 2007 level).
Industry observers may wish to note that, according to Rosstat data, Russia also produced more than 105 mt of iron ore products in 2007. The principal 2007 Russian iron ore production Holdings included Metalloinvest (41 mt of iron ore), Severstal (15 mt), NLMK (11 mt), Evraz Group (25 mt) and Mechel (5 mt).
2007 was a notable year for the Russian steel sector also because of the extent of Russian purchases of foreign steel companies. Thus, Evraz Group acquired Highveld Steel & Vanadium (South Africa), Delong Holding (China) with 3 mln tpy capacity, Claymont Steel Holdings (USA), Oregon Steel (USA), and with TMK the pipe business of IPSCO (Canada) from SSAB. Severstal have developed a large North American division (based on Rouge Industries' assets), and in 2007 commenced operations at the SeverCorr mini-mill; adding also Esmark, Wheeling Pittsburgh Steel and Sparrows Point plants to the Group. Severstal also of course now have 79% ownership of the Lucchini Group in the EU, and took 100% ownership of JV SeverGal after buying out ArcelorMittal's stake for approx USD 20 m. In 2007 also, Estar acquired Istil Group Holdings in Ukraine and NLMK acquired the Russian scrap collection / long product (reinforcing bars) producer Maxi Group.
2007 also saw some significant investment in new plant. Metalloinvest commenced construction of a new rolling mill in the UAE and added a new Midrex HBI module at Lebedinsky GOK. MMK together with Atakas began to build a new mini-mill in Turkey. Modernisations in Russia included a new casting-rolling complex at Vyksa, OMK; a small section rolling mill at the Rostov electrometallurgical plant; commencement of heavy plate production at Severstal's Kolpino plate mill, and announcement by MMK of plans for investment in a new plate mill 5000 next year.
Meanwhile, the Russian sector for coated steel grows dynamically. In volume terms production has grown by 11-19% per year over last three years and in 2007 output amounted to more than 2.27 mt of galvanized flat steel. Domestic consumption has also grown, reaching about 2 mt of galvanized steel and a further 1 mt of polymer coated steel in 2007.
A number of mini-mill projects are planned. According to expert forecasts, the share of EAF-produced steel in Russia will grow from ~27% in 2007 to about 35% in 2015. Russia has a scrap reserve of some 1.8 bn tonnes. In an average year, scrap collection is about 30-34 mt, from which approx. 24-25 mt is used by domestic steel producers. Total domestic scrap consumption was 42.5 mt in 2007 and exports amounted to 7.7 mt with an average export price of 270 US$/t.
Memo from Moscow is a free regular steel industry news report provided for visitors to www.steelonthenet.com with the compliments of Metals Consulting International Limited.
Researched by MCI's specialist steel team and published monthly, the report brings site visitors regular reports on topics such as Russian steel consumption, production, modernisation and investment, international trade, steelmaking in Ukraine, CIS steel prices, iron ore and metallurgical coal supply etc.
If there is a specialist steel-related topic in Russia or Ukraine that you wish our CIS team to brief you on, please e-mail us at MCI@steelonthenet.com or follow this link for further information about MCI.
